sackofspuds

See the article here, extracts below:

relatively low interest rates, high current account deficits, strong levels of consumer confidence and a debt-funded boom had all preceded the downturns of the 1890s, 1930s and early 1990s.

Unless some very favourable conditions for Australia continued, the current economic boom would have to end.

This week, the current account deficit reached $13.7 billion, or 6.5 per cent of GDP - just shy of the point at which former treasurer Paul Keating made his banana republic comments of the mid-1980s.

Quinkana

Exports sunk by choked ports

2005: 20% increase in iron ore, 50% increase in steaming, coking coal contract prices?

Reccession needed to get households to focus on saving and working off debt?

sackofspuds

Nothing changes. Ten years ago Australia was busy exporting its raw materials to Japan, now it's to China:

Shipping freight rates have jumped 400per cent over the past two years as China's ferocious demand for raw materials to feed its rapid industrialisation sucks in all available shipping.

Can't you just see China's influence, especially on countries like Australia, growing enormously? They have the second largest foreign reserves in the world behind, er, Japan.

Third highest foreign reserves? That would be Taiwan.

Fourth place? Korea.

Fifth and highest per capita in Asia? Singapore.

PortJackson

Outside of the biggest investment ~home purchase~ what do you see as areas that an average Australian could cut down on?
Serious question.Usually its second cars,overseas holidays(from UK view point) etc.What do Australians use as an excuse to dispose of income

Quinkana

Who pays the piper calls the tune. Actually, Japan is still Australia's largest export market.

Expect to see more Chinese direct investment in Australian resource projects - at the right price.

That was the Japanese story a generation ago - now the Chinese murmur?

bondipom

They have been insanely buying investment property. In the past a lick of paint and they could sell at a profit a year later. Plenty still throwing their money at it and not getting a rental or capital growth return.

Quinkana

Wouldn't hurt them to cut out excessive tucker and walk to the shops, take the bus / train / ferry.

But more seriously, they could divest "investment" properties and stop spending on household gadgetry tat and renovation services.

Brizbound

Not that I disagree but do not take what an "economist" says as gospel. Only a month ago there was considerable talk of imminent interest rate rises. Now suddenly its "mid next year". B*llshit. They don't know and if they did they would be very very rich people not some jumped up bank/real estate/journalist. You have as about as much chance as them of predicting right. The very best prediction of tomorrow's rate/inflation/growth etc ius todays.

Wol

Got it in one!

I could bang on about it forever but the real estate scene here - at least around Sydney - is sick.

Just got in from another round of looking at properties: 90% of them have little in the way of furniture / knicknacks because the owners have no spare cash after sinking all they have and a lot more into their "investments". 90% also have shelves with box files labelled with other properties - obviously their "investment" properties

It's the getrichquick syndrome: to be fair many of them have gotrichquick over the last fifteen years this way. I just don't see it happening like that again for a long time, and I am sure that many of those who are sitting in what they imagine are good "investments" are going to find the chair missing when the music stops.

Hels

To be fair tho, this kind of property investment has been happening all over the world for years.

In London, its been happening so much that all of the smaller properties, 1-2 bdrm for eg, have been bought up for buy to rents and the number of rentals are growing every day. However the number of 1st home buyers are slowing as they cant get onto the ladder.A majority of the properties that were traditionally prime 1st homebuyer targets are now rentals. This stagnates the market as people are less able to move up the ladder in the natural course of things.

I know this is happening here in Oz as well, however I have been living in London so this is the market that I have been watching.

jad n rich

A side to property most will not know. During the peak of the market here say 2001/2004 building costs skyrocketed so did labour. Examples Roof, no trusses just metal and downpipes fascia and gutter, average quote now $14,000 prior to this never any higher than $7,000 labour for a chippie, prior $22 an hour which incidently is about the casual award rate, now its around the $35.

Whats happening now is the cost of building is so bloody high its starting to slow, whos going to build houses/units that cost more than they can be sold for? Its already happening. At the moment its brilliant for us, there is very little new stock available for the type/quality we build, so what we have on the books is highly sought after but with roof quotes now hitting the $17,000 its not a game to play ball in. The flow on jobs will go, wages will plummet again. There will again be a big flow on effect to other industries.

Anybody here prior to 2001 should be able to tell you where the new cars/second homes/media rooms etc all got bought with the proceeds from the housing peak. Australias housing market is a very big driver in the economy, thats why we get to keep negative gearing

Would not be at all surpised to see interest rates kept steady or even cut or another housing incentive scheme brought in, housings been pushing australia along very nicely, if that goes so do a lot of jobs.

Most australians with money made it from housing if thats goes wheres the $$$$ coming from? Sheep? Grain? Tourism? interesting

bondipom

Just say no to Santa

http://www.news.com.au/common/story_...55E421,00.html

Alarm over $720b national debt
By Adam Bell and Jim Dickins
December 5, 2004
AUSTRALIAN families owe a massive $720 billion because of a credit-card binge and a surge in housing and personal loans.

Expensive time ... The Collett family shop for Christmas.
Figures released by the Reserve Bank reveal the level of household debt has more than doubled in the past five years.

With the traditional Christmas spending spree under way, there are fears the debt mountain will leave families exposed if there is an economic slowdown next year.

Treasurer Peter Costello said families should be cautious about loading up their credit cards this Christmas.

"People obviously want to give their kids presents at Christmas, but they should always be careful with consumer debt and credit bills that come after Christmas and bear that in mind," Mr Costello told The Sunday Telegraph.

Quinkana

Let's not overreact - if parents cut back on Christmas presents who will educate the coming generation in the Consumer Cargo Cult?

walla

house prices are also on the decrease except for Darwin and WA where they are expected to go on rising well into next year

Don

I'm not sure everybody understands the implications of this. Care to elucidate?